Valentine’s Day and Finances: Tips to Conquer Money as a Couple
Introducing the Valentine’s Day staples: romance, chocolate, teddy bears, and finances. Yes, finances! To embrace this annual celebration of love, we’re redirecting our cupid’s bow to target helpful money tips, encouraging your relationship to grow and your finances to blossom.
(Financial) Communication is Key
A wise person once said, “A relationship without communication is like a ship lost at sea, adrift and destined to sink.” Brutal, but true.
When it comes to managing finances as a couple, a lack of communication destroys financial plans and relationships as well! According to recent studies, 25 percent of all couples say money is their greatest relationship issue, with 65% of divorced individuals citing communication problems as a factor leading to their separation.
To summarize, a lack of financial conversations leads to broken relationships. But when two people speak the same language regarding money, something beautiful occurs.
What’s Your Money Language?
Have you ever heard of the five love languages? They include:
- Acts of service
- Quality time
- Words of affirmation
- Physical touch
- Receiving gifts
These five concepts are the most common ways people give and receive love. When people understand and act on the love languages of their significant other, their relationship benefits. When that understanding isn’t there… let’s just say the love turns sour.
Like having a preferred love language, each individual has a preferred way to manage their finances. This is referred to as your money language or money personality. A mutual understanding within a relationship of individual money management tendencies, strengths, and weaknesses helps avoid tension, resentment, and financial pain. To discover your money personality, take this free money personality assessment offered by NJ Fin Lit! Make it a fun activity with your partner, comparing results and enabling the conversation to get deeper.
Love Your Budget
Relationships are all about partnership. As they say, “What’s mine is yours.” However, that warm and fuzzy idea can get tossed out the window when you throw money into the mix. Money is a valuable resource, often making it challenging to share and proceed financially as a couple. The solution? Openly discuss preferences and budgeting. If you don’t know where to start, check out this helpful list of money-related questions to ask your partner.
Now, I’m not telling you to ask someone about their budget on the first date. However, having those conversations early on will help you decide if you want to get more serious with someone. Working collaboratively with someone on finances is a HUGE step in a relationship. Keep this in mind as we discuss action steps for couples, as most are not fit for casual dating.
If you DO want your finances to align with someone else’s for the long term, more serious planning is necessary. Discuss what your budgets look like now, what you want to be financially responsible for as a team, what personal spending will look like, and your goals for the future.
Here’s an example of a financial decision to consider:
When paying shared expenses, will you pay a proportional amount to your income or split it evenly? In other words, if one person makes 40 percent of your total combined income, should they pay 40 percent of the bills or 50 percent?
Dump the Debt
Another topic to discuss with your significant other is debt. For long-term relationships, you can decide if you’ll tackle debt as a team or individually, affecting how you plan for your future together. Discuss the debt repayment strategies in use and explore other options, such as those listed below.
- Use the avalanche or snowball method
- Use a HELOC or personal loan to consolidate debt
To Merge or Not to Merge?
After fully grasping each other’s financial desires and circumstances and forming a plan that works for your relationship, you can consider implementing any changes within a financial institution. Partners typically manage finances through a joint bank account, separate bank accounts, or both.
Joint Bank accounts
With joint accounts, you and your partner’s finances are combined, and you are the account’s owners, meaning you’re equally responsible for it. Both users can access funds, make withdrawals, process payments, and make other financial decisions like with a regular account.
The main benefit of a joint account is that it’s a safe place where two people can deposit their paychecks, which is beneficial if they share a lot of expenses such as mortgages, bills, groceries, and so on.
Pros:
- More straightforward to pay shared expenses
- Convenient for monitoring combined spending habits
- Easier to reach shared saving goals
- Sign of commitment and trust
Cons:
- No control over the spending habits of other users
- All parties are responsible for fees
- It could be a challenging transition if the relationship ends
- More communication is needed about entering with unequal accounts or contributions going forward
Separate accounts
Your finances are yours, and your partner’s finances are theirs. There is no mixing. You go on managing your own money like you have been.
Pros:
- Only responsible for your spending and saving decisions
- Protection in case of separation or relationship issues
- Less tension over differences in income
- More financial privacy
Cons:
- More difficulty managing shared expenses
- More challenging to reach shared financial goals
- Could cause resentment or lack of trust
- Reduced sense of unity
Hybrid Approach
For those looking for a mix of the previous options, a hybrid approach could be for you. Couples can contribute a portion of their income to a joint account for shared expenses and another to their separate account for personal financial goals.
Pros:
- Balance of independence and commitment
- Able to contribute to shared expenses
- Customizable for personal and joint budgeting
Cons:
- Must agree on contribution amounts. Challenging for couples with a large gap in salary.
- More time-consuming to manage multiple accounts
- Lack of full transparency in personal spending
Say “I Do” to HoneyDue
After settling your accounts, consider using a helpful app like HoneyDue to keep you and your partner on track. HoneyDue is a free budgeting app specifically designed for couples. With it, you can link all your checking and savings accounts, credit cards, investments, and loans. This means you can easily track balances, budgets, and bills together in one location. It even gives you bill reminders!
Happily Ever After
Love lasts forever, but there will come a day when you or your partner are no longer around. Knowing what happens to your money when you die is one of the most significant ways to help your loved ones when that time comes.
Here are some helpful estate planning tips:
1. Create a will
A will eliminates uncertainty, helping your loved ones understand exactly how your assets will be distributed. This simple step can greatly reduce stress during an emotional time.
2. Organize your credit cards
If a credit card owner dies and you are an authorized user on their card, do not continue to use the card. The card issuers will close the account within a few weeks of the owner’s death. They may sue if they see that an authorized user has continued to use the card. To ensure uninterrupted access to credit, it’s wise for each partner to have their own credit card.
3. Gather important account passwords and paperwork
Don’t leave your partner scrambling to locate essential information. Compile account passwords, legal documents, and other important paperwork in a secure but accessible location.
4. Establish a POD, TOD, or right of survivorship agreement for bank accounts
For individual accounts, designate beneficiaries through “Pay on Death” (POD) or “Transfer on Death” (TOD) arrangements. These ensure the funds in your account go directly to your chosen recipients.
For joint bank accounts, review your account agreement to confirm if rights of survivorship are in place. This ensures that account ownership automatically transfers to the surviving account holder.
We’d Love to Help
Strengthen your relationship and your finances with the help of 1166 FCU. Contact us for assistance with account management, debt repayment, estate planning, and more!
Contact Us: Browse our website for more information or contact us at 856-542-9241 to speak to a member of our team. You can also find 1166 on Social Media here:
Instagram: https://www.instagram.com/1166fcu/
Facebook: https://www.facebook.com/1166fcu.org
LinkedIn: https://www.linkedin.com/company/99499168/admin/feed/posts/
Twitter/X: https://twitter.com/1166FCU?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor
About Author
